To be a successful investor you don't need a fortune
to invest, years of experience, subscriptions to the best investing newsletters,
and the time to read them. All you need is a good mutual fund manager.

Mutual funds are composed of investors just like you who have mutually
decided to pool their money and hire a professional investment manager.
You don't even have to round up all your friends and convince them to
invest with you. Existing mutual funds are offered by investment companies,
banks, trust companies, credit unions, insurance companies, even professional
organizations.

The main advantages of mutual funds are professional management and investment
diversification. Because mutual funds are generally regarded as long-term
investments, you don't have to worry about them daily. By not centralising
all your funds in one specific stock or bond, you reduce your risks while
increasing the possibility of gains.

Mutual funds have specific objectives. Some may concentrate on speculative
growth investments, others on preservation of capital and a steady income.
The trick is to find a fund that shares your objectives. Mutual fund portfolios
may include common stocks, preferred shares, bonds, treasury bills, precious
metals, and real estate in any combination.

Day-to-day investment decisions are made by the fund manager who decides
the asset mix within the objectives of the fund.

Open and Closed Funds

Most funds are open-ended, which means there is an unlimited number of
units offered and investors are able to contribute and withdraw money
whenever they choose. The amount contributed is divided by the current
unit value to determine how many units are purchased. The amount withdrawn
is divided by the current unit value to determine how many units are to
be redeemed.

With open funds, you have the additional option of reinvesting proceeds
from the fund, such as dividends, or receiving the proceeds outside the
fund.

Some funds are closed-ended, which means there is a fixed number of units
for sale. Closed funds are usually traded on an open stock exchange for
less than their underlying value, and you can't buy or sell unless there
is another willing seller or buyer.

How Do I Know How My Investment is Doing?

The total value of the fund is called the net asset value, or NAV. This
is calculated by taking all the fund's investments at market value and
subtracting management fees. Dividing the NAV by the number of units sold
determines the net asset value per share, or NAVPS.

The NAVPS is calculated on a daily or weekly basis (except for real estate
funds, calculated monthly) and printed in the mutual fund tables of newspapers
such as the Report on Business section of The Globe and Mail.

You may also receive quarterly and annual reports on the performance
of the fund and, if you choose automatic reinvestment of any proceeds,
notices of the additional shares purchased.

What Are the Costs for Mutual Funds?

There are varying costs for mutual fund professional management. There
may be commissions on the purchase of units, which are payable either
to a broker or directly to the fund management company as a "front-end
load". Front-end loads are usually negotiable. There may be redemption
fees for withdrawals called "back-end loads" calculated on your original
capital investment or the market value. Back-end loads usually decline
the longer you keep your money in the fund.

There are on-going management fees charged by the fund manager for research,
buying and selling investments for the fund, and issuing reports. These
generally range from 1% to 3% of the fund's total assets for the year.

Fees do not always reflect the performance of the fund. Since mutual funds
are generally regarded as long-term investments, annual management fees
are usually more important than loads.

So, Are Mutual Funds for Me?

Professional management, diversification, and long-term gains are the
benefits of mutual funds. Your financial advisor or broker can advise
you on which mutual funds are best for you and your investment goals.

If you would prefer spending time with your children or learning to play
the zither rather than poring over daily investment reports, then mutual
funds may be for you.